On June 3, 2009, the Pennsylvania Senate unanimously passed a “mini-COBRA” bill for employees of small employers in Pennsylvania. The bill will provide for continued health insurance in a manner comparable to the federal COBRA law. The bill has been sent to Governor Rendell for his signature.
The new law has two important provisions. First, it will require small employers’ group health plans that are not subject to the federal COBRA law (typically, those of employers with between two and 19 employees) to offer continued group health insurance to employees and qualified dependents of employees who experience a qualifying event, including death of a covered employee, termination of a covered employee’s employment (other than for the employee’s gross misconduct), and a spouse’s divorce or legal separation from the covered employee.
Such continuation coverage must be offered at the same level of benefits that the employee received prior to the qualifying event, and for a period of up to nine months from the date of the qualifying event. Coverage will be offered at the employee’s or the qualified dependent’s expense (up to 105 percent of the normal cost of coverage).
The law will exclude from continuation coverage any individual who (i) was not covered by the employer’s group health plan for at least three months prior to the qualifying event; (ii) is eligible for coverage under Medicare; or (iii) is, or could be, covered by another group health insurance arrangement. Second, the Pennsylvania mini-COBRA law will enable covered individuals to take advantage of the premium subsidy provisions of the American Recovery and Reinvestment Act of 2009 (ARRA).
Under ARRA, any employee of a small employer who becomes entitled to continuation coverage under the Pennsylvania mini-COBRA law by virtue of his or her involuntary termination from employment will be entitled to a federal government subsidy of 65 percent of the premiums for the coverage, so long as the employee pays the remaining 35 percent. An employee will be eligible for the subsidy only if his or her employment termination occurs after the effective date of the new law, which will be the 30th day after signature by the governor, and before January 1, 2010.
The new law includes notification requirements applicable to employers, employees and dependents, plan administrators, and insurers. The group policy must provide notice of the new law to policyholders within 45 days of the effective date of the law.
Employers of covered employees, within 30 days of a qualifying event, must notify the employee or dependent, the insurer, and the plan administrator (unless, obviously, the plan administrator is the employer) of the qualifying event and must inform the employee or dependent of his or her rights under the law. The covered employee or eligible dependent must notify the plan administrator of his or her election of coverage within 30 days of receiving the notice of rights from the employer.
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